Analysts: Bond insurer breakup likely to lead to lawsuits

02/19/2008 | Reuters

Bank of America analysts say the plan to split bond insurers into two companies may spur a wave of lawsuits. "Despite the regulatory interest in separating the exposures, the essential fact remains that all policy holders, whether municipal or structured finance, entered into contracts backed by the claims-paying resources of the entire entity," wrote analyst Jeffrey Rosenberg in a note to clients. "The fact that one group of policy holders' exposures has imperiled the policies of the other does not mean they should forfeit the value of their claims altogether."

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